GREAT EXPECTATIONS - RENTING YOUR PROPERTY Thursday 22nd March 2012
How do they do it? Is it worth it? What’s the damage? There are many points and ‘issues’ which need to be seriously considered when loaning your property in exchange for a few dollars. The pros and cons of the rental market are worth more than a quick thought.
There are typically two main reasons for renting: offsetting cost and making use of your villa. Even if you don’t break even, offsetting costs can still help significantly with general expenses. If your property is mortgaged, there are formulas that can help gauge its rental viability. Properties that stand empty for long periods of time incur problems. Toilets need flushing to stop stagnant water, windows need opening to avoid damp, taps need occasionally flushing through, etc. It is worth thinking beyond the quick dollar return. Although some homeowners rely on it for cash flow, if not considered properly the long term impact may not be as profitable as first thought.
As with all services, from your builder to your local car mechanic, the success of your rental arrangement relies on the customer’s expectations!
Most holidaymakers in the middle price bracket can only holiday in the Caribbean annually, if at all. They arrive excited, tired, and with heightened expectations. Some have saved very hard for the previous 11 months. Most, from uber efficient Europe or America, arrive in the Caribbean still in the ‘mental stress zone’. Worse still, some stay in that zone for quite a while. Sometimes it is two or three days before they stop jumping at every car horn, or panicking at the sight of a cow in the road, until they finally unwind.
So for these people to suddenly discover a kitchen knob coming off, a curtain hanging lose, even a sheet not properly ironed, means their holiday is not starting well. Then they may be on the lookout for more problems. It pays to think things through properly.
Without the help of an efficient, trusting and reliable agent to help you through the hurdle, you may end up with more trouble than it’s worth. Successful and profitable renting relies on smooth working relationships, with upfront costs, invoices and rental figures. And expectations explained and stuck to.
The majority of agents/managers typically charge between 10 - 20%. Their tasks and promises vary and it is worth knowing how. Wild promises of over-exuberant efficiency invariably lead to disappointment. Make sure you know what you can realistically expect from your manager or agent and be realistic yourself!
As a simple example, a property that is not lived in, nor visited for most of the year may just incur extra charges for odd repairs when a client is in situ. It would be unrealistic if you were not to expect that. Conversely, it is unrealistic for an agent, or even a friend, to randomly charge a homeowner for something without forewarning.
Consider this is a seasonal business.
Work out your running costs for the average number your house accommodates, including allowances for things like air-conditioning use. Even your best friend may use your a/c all day and all night, leaving windows and doors open! Furniture will suffer from sun tan oil, sand may get into the plumbing system or pool, etc.
Allow for general maintenance. After a year the inside might need repainting and furniture may need recovering or even replacing. It pays to ensure you offer a regular maid service. An efficient maid helps to keep an eye on things for you too.
Make sure you are clear on what is and what is not included, from the number of people, to use of your personal items like bikes and surf boards. There is no point in quoting a rental price based on your calculations for a family of four, only to realise they’re bringing friends and camp-beds etc. The Caribbean involves a lot of outside living, with sand and dirt too! Six people showering twice a day means your cost allowance has to accommodate 84 hot water showers a week.
At the end of the day, you have to set what is acceptable to you; a group of students will enjoy your property in a different way to a retired couple who just want to sit and read books in the sun!
Some countries set safety requirements from fireproof mattresses to smoke alarms and much more. Review and acquaint yourself with the legal requirements in your area.
Of course it’s important to check the law in your region; make sure you are insured, create a rental contract, including allowances for security deposits, cancellation policies, refunds, penalties and restrictions (pets/smoking, maximum occupancy and minimum stays).
Become knowledgeable on applicable tax implications, CGT and sales or occupancy tax in your country. And save your receipts!
Rather than relying on those touting for business, it may pay to seek proper legal advice, particularly for self-protection in this increasing litigious society.
Paying guests mean expectations get higher, and associated costs are therefore more likely. Expectations and standards vary with guests from different countries; a lot of Americans expect dryers or safety gates around swimming pools. Some guests even smoke in bed (if you’re lucky you will never know) and some arrive, no matter what bracket your property is in, expecting a daily maid service!
Your own individual circumstances may differ from the norm. Understand the bigger picture, (agency and management fees, insurance, liability, maintenance, repairs, redecorating, housekeeping fees, marketing costs, monthly dues) as well as what is involved and you minimise disappointment.
And don’t forget to reserve your preferred weeks for yourself! The more you enthuse about your home, the more others will want to rent! Happy renting!
Worth adding to your check list:
- Present the property how you would wish to find it
- Ensure someone knows the ins and outs of your property, from how the shutters close or where the breaker box is, to the number of your local odd-job man.
- Ensure you have the technical stuff (security deposits etc.) in hand
- Create an inventory!
- Make sure you have a point of contact available at all times
- Leave spare keys with someone and a Guest Book for tips and hints; that’s always nice!
Written by Jody Sallons-Day
Independent Property Broker.
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